THE BLOG
07/28/2014 10:15 am ET Updated Sep 26, 2014

3 Reasons Why Wall Street Wants You to Fail

To many The Wolf of Wall Street movie's theme of brokers cheating their customers is limited to the miniscule niche of penny stocks.

Unfortunately, experience teaches me that Wall Street is far more scandalous and wide-reaching than anything Martin Scorsese could ever direct.

Forget about the memorable scene in the movie where Matthew McConaughey tells a just-beginning broker Leonardo DiCaprio the point of Wall Street is to move the client's money into the broker's pockets, Wall Street flourishes by tapping into their customers' greed, teaching them habits that rarely lead to great success all while pillaging their accounts gradually slowly but surely over time.

Very much how the machines in another hit movie The Matrix keep the human race alive solely to gradually suck the energy out of them all their lives.

At least penny stock promoters like Jordan Belfort are straight up criminals whose actions are easy to spot, while Wall Street's misdeeds are far less obvious but far more widespread and damaging.

Banks, brokerage firms, credit card companies, analysts and financial advisers all make their living through fees. Transactional fees, periodic fees, periodic fees on transactions paid in increments over time!

They understand their customers' dreams of great wealth and spending and they use every means possible to encourage stability, not excessive growth (due to the risk of those fees being cutoff in the case of outright failure), while skimming small but meaningful-over-time fees off the top of all deals and information they provide.

Are you stuck in a bad investment? Your broker will gladly help you sell the dud and put you into another investment of their choosing, collecting fees on both your sell and new buy.

Will the new investment work out? Your broker could care less; they just got paid double on your action! In fact, it's in their best interest for the new investment not to do too great so you'll be forced to exit that one too, ideally with a small gain or minimal loss, and of course be encouraged to roll that money into something new; on and on and on it goes, your broker getting paid every time whether or not you win or lose.

Financial advisers recommend load-based mutual funds not solely due to their superior investment potential but because many of these "safe" mutual funds pay the financial advisory big time fees of 3-6% upfront as incentive to get their customers invested! 

What if the mutual fund doesn't perform well? Your financial adviser gets paid upfront on the load fees, the periodic fees over time are much lower so hopefully the fund doesn't do well so they can get you out of one fund and into another for another upfront load fee! 

Does your company need to pivot or acquire other companies to thrive in today's fast moving world? Your friendly investment banker will draw up plans to help you do a deal that will help save your company and help you grow fast!

Will the new deal work out?

Who cares, investment banks and the bankers who work for them get paid when new deals are signed, not based on how successful the deals eventually prove to be over time!

Sure, sure, there are bonuses for bankers when deals go well and you're more likely to put more money into your account with your broker or financial adviser if your investments do well, but because most traders lose money, most small businesses fail and most investors, even professional money managers, fail to beat a simple stock market index like the S&P 500 year in year out, despite all their in and out of investments transactions, fee collectors play the odds and are in the business of getting paid no matter if you succumb to the odds or not.

Do they know the statistics that making constant moves in investments and businesses aren't likely to succeed? Of course they do, but they're in the fee collecting business and they know that most people are not financially competent so they will inevitably blame bad luck or themselves for failure, never bothering to look at historical statistics to realize the only way to make consistent money on Wall Street is through fees on transactions that aren't tied to success or failure.

Perhaps you're smart enough to just put your money into an index fund or exchange traded fund (ETF) with low fees and low expenses, but sadly even then most conservative investors are taught to save over the long-term, invest gradually via periodic contributions while slaving away at stable jobs that suck up their entire life which provides for their family but not much else. Perhaps retirement is in the cards after a few decades of hard work and saving.

In the meantime, most people are stuck working hard every day in order to make enough money simply to put food on the table while gradually paying down credit card interest payments, school loans, and mortgage and lease payments so it's difficult to put aside much extra money into life-changing investments that can help them get out of the rat race.

More than half of America has savings of less than $10,000 so "splurging" on a family trip to Disney or Six Flags theme parks for a day becomes the norm and these hardworking responsible types wonder how did they ever get sucked into this cycle with little to no hope of escaping.
All the while Wall Street and financial institutions rake in fees and rejoice in the consistent fees paid regularly thanks to the status quo and financial mediocrity of all the Americans stuck in the rat race.

So how can you break free of the Wall Street system?

The answer:  invest in yourself. 

Don't go to a theme park to distract you for your predicament; spend your free time researching ways to truly grow your savings and wealth.

There is so much free information online pertaining to smart investing and the help you need to grow any business in any sector. You can visit websites that show you investment fund track records, and self-directed online brokers where you make the investment decisions, not fee-collecting outsiders.

It's time you get mad and take control of your destiny instead of feeding fees to others.

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